In keeping with ADP, non-public payrolls rose by 42,000 in October, greater than anticipated and bucking labor market fears

Wage growth at private companies was slightly stronger than expected in October, raising hopes that the labor market is not in danger of contracting, ADP reported on Wednesday.

Companies added 42,000 jobs this month, after a decline of 29,000 in September and beating the Dow Jones consensus estimate of a gain of 22,000. An audit for September showed 3,000 fewer jobs were lost, the payroll company said.

A gain of 47,000 in the trade, transportation and utilities grouping helped offset losses in several other categories. Education and health services also saw an increase of 26,000, while finance added 11,000.

Despite the technology boom driven by artificial intelligence, information services saw a decline of 17,000 jobs. Other sectors that posted losses included professional and business services (-15,000), other services (-13,000) and manufacturing (-3,000), a sector that continues to struggle despite President Donald Trump’s tariffs aimed at bringing factory jobs back to the US

All newly created jobs came from companies that employed at least 250 people. In this category, 76,000 jobs were created, while smaller companies lost 34,000. The trend away from job growth among small businesses is clear when you consider that they account for three out of every four jobs, said Nela Richardson, chief economist at ADP.

“While big companies grab headlines, small businesses are driving hiring,” Richardson said on CNBC. “So the weakness at the small business level is still concerning and I think that’s one of the reasons why the recovery has been so muted.”

Despite meager job growth, salaries continued to rise. Year-over-year, wages of those who kept their jobs rose 4.5%, the same as in September, while job changers saw a 6.7% increase, a slight increase from the previous month.

“Private employers added jobs in October for the first time since July, but hiring was modest in comparison
“This is what we reported earlier this year,” Richardson said. “Meanwhile, wage growth has been largely stagnant for more than a year, suggesting that shifts in supply and demand are balanced.”

According to ADP, job growth is averaging about 60,000 per month. However, this decreased significantly in the second half of the year.

The ADP count comes out on the first Wednesday of the month and typically takes a back seat to the Bureau of Labor Statistics’ official nonfarm payrolls report, which is released two days later. However, due to the historic government shutdown, the BLS, like all other government agencies, has suspended data collection and sharing.

Had the BLS report been released, Wall Street would have expected a decline of 60,000 jobs and an increase in the unemployment rate to 4.5%.

Federal Reserve officials expressed concern about the state of the labor market, saying it has overtaken the central bank’s attention for now amid inflation above the 2 percent target. The Fed agreed to cut its key interest rate by a quarter of a percentage point at its meeting last week, now targeting 3.75% to 4%.

Although the BLS is no longer known, officials will take a look at other data this week.

Challenger, Gray & Christmas releases its monthly overview of announced layoffs on Thursday, as economists monitor state-level jobless claims to see if companies are reducing their payrolls. The University of Michigan will also release its monthly sentiment index on Friday, providing snapshots of how consumers feel about the overall economic situation. In fact, recent data from the job board shows that job postings are at their lowest level since February 2021.